When AdaptHealth Holdings LLC, the third largest distributor of home medical equipment in the United States, merges with DFB Healthcare Acquisitions Corp., a special purpose acquisition company sponsored by Deerfield Management and Richard Barasch, DFB will be renamed AdaptHealth Holding Corp. and remain NASDAQ-listed under a new ticker symbol.
The combined company will represent an initial enterprise value of approximately $1 billion and market capitalization of approximately $800 million.
Adapt’s management and major equity holders will roll their equity into AdaptHealth, and proceeds generated by the transaction will be used by AdaptHealth primarily to reduce debt and fund future growth and acquisitions.
A fund managed by Deerfield has signed a subscription agreement to support the transaction to backstop redemptions and/or provide additional capital to Adapt.
Adapt’s current management team is expected to remain in place, supplemented by Richard Barasch as newly appointed Chairman of AdaptHealth.
Adapt’s net revenue has grown from $174 million in 2016 to an estimated $522 million in 2019. For 2020, net revenue is expected to rise to $583 million. These projections exclude the impact of any future additional acquisition activity, and based on the current pipeline of acquisitions, the company believes it can add approximately $100 million of acquired revenue each year.
Adapt intends to continue to focus on increasing net revenue both organically and via accretive acquisitions and has identified a significant volume of potential acquisition opportunities it will target in late 2019 and early 2020.
The transaction, which has been approved by the board of directors of DFB and the board of managers of Adapt, is expected to close in the fourth quarter of 2019 subject to, among other customary conditions, approval by DFB shareholders and DFB having a minimum of $225 million of cash at closing, of which $25 million may come from the DFB Trust account invested by Deerfield and up to $100 million from the additional Deerfield equity investment.